In our previous posts, we addressed the importance of having a solid and well-tested customer acquisition strategy, but what happens next? Once you’ve built and grown your customer base, your work is far from done – now you need to make sure your current customers continue purchasing your products and services. To help you foster those relationships and turn new customers into loyal ambassadors, let’s talk about how you can shift your strategy from focusing on customer acquisition, to prioritizing customer retention.
Why focus on customer retention?
It’s simple: because it makes more business sense. The Harvard Business Review found that acquiring a new customer is 5-25x more expensive than keeping the ones you already have. Numbers also show that the success rate when selling to past customers lies around 60-70%, while for new customers, the batting average hovers around 5-20%.
What do those numbers reveal? It’s simple: it’s a lot harder to convince people to try your product for the first time. So let’s take a look at three easy ways to convert current customers into repeat purchasers.
1. Use a referral marketing strategy
In our daily lives, referral marketing comes to us fairly organically and intuitively: If we like a product or service, we’re likelier to tell our friends about it and buy all the things.
Like so many of our other conversations, those recommendations and tips are increasingly happening online. In fact, ReferralCandy stats show 3.3 billion brand mentions every day in America alone. Learning to harness that chatter and incentivize sharing can be a powerful tool in your retention arsenal, as customers acquired through word-of-mouth spend 200% more than the average customer, and make 2x as many referrals themselves.
Startups like Airbnb relied heavily on referral marketing during their early stages to promote growth and community-building. In the process, they were able to leverage trust in order to convince first-time customers to do something a bit crazy: live in a complete stranger’s house somewhere halfway across the state, country, or world.
In their ongoing referral program, a successful referral can earn a user up to $95, and in the process, mitigate the initial risk and insurance costs for first-time customers.
Today, existing hosts who make a successful referral also get $100 for each friend hosting their first trip on Airbnb. Referred friends then earn a $50 reward if they receive their first booking within 150 days – making it a win-win-win situation for the entire ecosystem.
We’ve got to say, that’s a pretty persuasive email as well!
By understanding the importance of slick messaging and a strategic call-to-action, Airbnb gave potential hosts a peek at their potential earnings, and built trust by promoting services like 24-hour support and insurance-backed guarantees. It’s fair to say, their strategy proved fruitful, swelling their community to over 6M+ listings in 191+ countries.
2. Send smart re-engagement campaigns
Just as with any relationship, startups and customers can sometimes grow apart. Perhaps the timing isn’t quite right, and your customers don’t have the budget or need for your services just yet. Perhaps they’re still researching and comparing their options for now, and they’re still a few steps away from the purchasing stage. Whatever the reason for that distance, it’s essential to make sure they don’t forget your company altogether. One way to stay on your customer’s radar? Send follow-up emails or reengagement campaigns meant to tickle their fancy at every step of the purchasing journey.
Here are the stats that back it up. A study by Return Path found that utilizing reengagement campaigns led to a 92% inbox-placement rate, which means your message is less likely to land in a spam folder and be forever lost to the world. And there’s more. According to Smart Insights, 45% of recipients who receive reengagement emails actually read them. And though that number drops to 24% for inactive consumers - those results still far exceed benchmark standards for cold-call emails and marketing.
Take Sidekick by Hubspot, for example. Their reengagement email for inactive readers proves that brands can break up on good terms. They offer a clear list of everything their emails have to offer, all the while showing the utmost respect for the inactive customer’s inbox. The result: increased brand trust and a much higher chance that you’ll consider giving Sidekick a second chance.
And if the email does manage to changes minds, they can easily click on the blue button to stay in touch and renew their subscription.
3. Improve customer service
You’ve probably heard a lot about the benefits of good customer service, but it can’t be overstated: a great customer experience has a huge impact on sales. Data from Strategic Customer Service found that proactive help, consistently good service, information on new products and services, well-maintained personal relationships and fast or friendly interactions have a considerable impact on customer loyalty.
After all, who wouldn’t prefer to buy from a startup with a responsive sales rep, empowering tools and content, and a built-in sense of community? Your number one tool for customer retention is and always will be a great product or service, and your customer’s experiences play a key role in defining their understanding of what makes you trust-worthy and unique.
Article written by Monique Danao